Lot Owners do not delay to bring claims for damages due to Owners Corporation’s Failure to Comply in particular its duty to maintain common property – Limitation Period Applies

13/04/2023

See further article dated 27 September 2023 which refers to the Supreme Court Decision in relation to the Tezel case referred to below

In our article 13 September 2022 we refer to the NCAT Appeal Decision in the case of “Tezel.”

Section 106 of the SSM Act 2015 provides the circumstances in which the Owners Corporation must maintain the common property and the possibility of a Lot Owner claiming damages and losses for the Owners Corporation’s failure to maintain and/or repair the common property.

On 6 March 2023 the Court of Appeal of the Supreme Court of New South Wales allowed the Owners Corporation’s Appeal from the Decision of the Civil and Administrative Tribunal of New South Wales in the case of “Tezel v Owners – Strata Plan 74232” which was decided in May 2022. This decision relates to the interpretation to be given to Sections 106(5) and 106(6) of the Strata Schemes Management Act 2015 (NSW) (SSM Act 2015). 

In our article 13 September 2022 we set out the terms of Section 106 of the Strata Schemes Management Act and provided a brief history of the facts surrounding Tezel’s case.

We summarised in our earlier article, the basis of the determination of the NCAT Appeal Panel to come to its decision as set out in that article.  The Owners Corporation appealed the NCAT Appeal Panel Decision and “Tezel” defended the Appeal and sought that the NCAT Appeal Panel Decision be upheld. 

The question related to the interpretation of when the 2 year limitation period for bringing such a claim commences.  The Supreme Court decided the limitation period commences when the Lot Owner “first becomes aware of the loss” as specified in Section 106 (6) of the Strata Schemes Management Act.

The Court of Appeal did not agree with the interpretation of the NCAT Appeal Panel and indicated that “the phrase in the SSM Act ‘first becomes aware of the loss’ should be construed to mean the time at which the Owner was first aware of the kind or type of loss that is subject to the complaint” which in Tezel’s case, was the loss of the rent. 

This is different to the Lot Owner first becoming aware of the cause for example, water ingress that may trigger the loss as distinct from the kind or type of loss.

This case did not deal specifically with the interpretation of the loss as referred to in Section 106(5) of the Strata Schemes Management Act.  Section 106(5) states:

“An owner of a lot in a strata scheme may recover from the owners corporation, as damages for breach of statutory duty, any reasonably foreseeable loss suffered by the owner as a result of a contravention of this section by the owners corporation.”

In such circumstances, the limitation period can and often will expire before the quantum of the ascertainable damages which are recoverable. 

In those circumstances, the case must be commenced in the Tribunal or other jurisdiction within the time provided for and calculated in accordance with Section 106(6).  This requires care and consideration of the matter.

The commencement date is determined on the particular facts of the case.  Please do not delay in contacting us, so that we can consider the facts and provide advice in relation to your matter.

In addition to the provisions under Section 106(5) and (6) there are other possible avenues that may be considered, however depending on the circumstances of the case.  It is critical that the Lot Owner and/or the Owners Corporation should obtain advice to protect their positions at the earliest possible stage.

At Watson & Watson our experienced Strata Lawyers can assist you in all matters pertaining to strata complexes whether they are residential or commercial.  Please contact Richard Watson, Senior Strata Lawyer and Accredited Specialist in Commercial Litigation specialising in the stream of building and construction or by contacting his Personal Assistance Shereen DaGloria to discuss your important matter.  Following your contact with Shereen Da Gloria who will ascertain the factual information pertaining to your matter, we can provide you with a fixed fee for an initial conference to discuss the matter and provide our advice and recommendations.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 9221 6011.